Global Water Resources ((GWRS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Global Water Resources highlighted a balanced sentiment, reflecting optimism for long-term growth through strategic initiatives and legislative successes, while acknowledging current challenges with decreased building permits, increased operating expenses, and lower net income. The company’s outlook is cautiously optimistic, with promising prospects tempered by immediate operational hurdles.
Tucson Acquisition
The company successfully closed the acquisition of seven public water systems in Tucson, adding approximately 2,200 connections and $7.7 million to its rate base. This acquisition was made at an attractive price of 1.05 times the rate base and is expected to generate $1.5 million in annual revenue, marking a significant step in Global Water’s expansion strategy.
New Water Legislation
A significant legislative win for Global Water Resources came with the signing of the ‘Ag-to-Urban’ water legislation by the Arizona Governor. This new law is anticipated to create a new groundwater supply, supporting growth in the company’s service areas and enhancing its ability to meet future demand.
Highway 347 Expansion
The full funding approval for the Highway 347 expansion is another positive development, expected to bolster growth in the City of Maricopa. The area is projected to grow by nearly 90% by 2040, and this infrastructure improvement is crucial for supporting such rapid expansion.
Growth in Service Connections
Global Water Resources reported a 6.6% increase in total active service connections, reaching 68,130 as of September 30, 2025. This growth reflects the company’s ongoing efforts to expand its customer base and service reach.
Revenue Increase
The company saw an 8.4% increase in total revenue for Q3 2025, reaching $15.5 million compared to Q3 2024. Year-to-date revenue also rose by 7% to $42.2 million, indicating strong financial performance despite market challenges.
Decline in Building Permits
There was a notable decline in building permits, with the Phoenix area experiencing a 29% decrease in Q3 2025 compared to the previous year. The Maricopa market also saw a 20% decrease, highlighting potential headwinds in the construction sector.
Increased Operating Expenses
Operating expenses for Q3 2025 increased by 21.9% to $12.6 million, with year-to-date expenses rising by 12.8% to $35.4 million. This rise in costs poses a challenge to the company’s profitability in the short term.
Decrease in Net Income
Net income for Q3 2025 was $1.7 million, down from $2.9 million in Q3 2024. Year-to-date net income decreased to $3.9 million from $5.3 million in 2024, reflecting the impact of increased expenses and market conditions on the bottom line.
Adjusted EBITDA Decline
Adjusted EBITDA for Q3 2025 declined by 5% to $7.8 million compared to the same period in 2024. This decrease highlights the financial pressures faced by the company amid rising costs and market challenges.
Rate Case Challenges
The company is navigating challenges with its rate case, where the initial staff report was 50% below the company’s proposal. The process is ongoing and is expected to be completed by mid-2026, with potential implications for future revenue.
Forward-Looking Guidance
Global Water Resources provided forward-looking guidance, emphasizing the positive impact of the Tucson acquisition and the expected $1.5 million in annual revenue it will generate. The company is also optimistic about the growth potential from the Arizona Ag-to-Urban law and the Highway 347 expansion. Despite current financial challenges, these initiatives are expected to drive future growth and sustainability.
In summary, Global Water Resources’ earnings call painted a picture of a company poised for long-term growth through strategic acquisitions and legislative support, despite facing immediate financial and operational challenges. The sentiment was balanced, with optimism for future prospects tempered by current market realities.